When dealing with cash flows, the is computed by trial and error.
A)uniform;internal rate of return
B)perpetual;internal rate of return
C)uneven;internal rate of return
D)uneven;net present value

Question

Quizplus · Accepted Answer

The statement is referring to the process of finding the Internal Rate of Return (IRR) which is used to evaluate the desirability of an investment opportunity. This method involves finding a discount rate that causes the net present value (NPV) of the cash flows to equal zero. Since the cash flows are uneven, option D can be eliminated. Option A can also be eliminated because a uniform cash flow stream would not require trial and error in IRR calculation. Option B can be eliminated because it refers to perpetual cash flows, which is not relevant to this scenario. Thus, the correct answer is C.

When Dealing with Cash Flows, the Is Computed by Trial